Massive failure- and what will come next

Mark Twain once said “Principles have no real force except when one is well-fed.”

Someone in Washington better take heed, and fast. Latest unemployment figures look like the beginnings of a class war. It’s nice Congress just said no to $1.75 Billion in new fighters- but, we need to FORCE big companies to start hiring Americans pretty quick.

Here are the latest horror numbers for our fair town:

In June, Dayton’s unemployment rate hit 13.7 percent, up from 12.6 percent in May, and 8.6 percent in June 2008, according to the Ohio Department of Jobs and Family Services.

Montgomery County’s unemployment level in June also rose, climbing from 11.4 percent in May to 12.4 percent in June, following a loss of nearly 3,000 jobs. Last June, the county’s unemployment rate was 7.4 percent.

Normally, a war is a great way to spur employment, but this one isn’t big enough. It’s expensive enough, but we’ve gotten much more efficient at killing and need less grunts on the ground.

While bailed out banks are arguing over bonuses vs salaries in the 6 figure range, people in towns like Dayton across the country are getting hammered. It can’t go on. Sure, health care costs are a major contributor- but when people can’t eat- they sure can’t afford health care.

This country has the power to regulate a lot of commerce. We regulate utilities, we regulate banks (poorly) we regulates monopolies, we regulate stock offerings. It’s time to pull the emergency brake and force companies that trade publicly, to halt compensation over $500K for the next 2 years unless the company hires more Americans. No more million dollar payouts to any CEO who lays off workers- in fact- no paycheck at all during the crisis if you hand out a pink slip.

Until we get our priorities straight, and get our economy back on its feet, all the “principles” of a free market need to go out the window, before we end up owned by China, Japan, India and Russia.

We’re in a war right now- and it’s not being fought with guns- it’s over bread and butter. And if the folks in Washington don’t get smart real fast, they may find that it’s hard to argue with hungry people on the streets- people who once had jobs at companies where the CEO is still fat and happy.

How bad will it have to get before the voices of the unemployed get heard? 13.7% is pretty close.

Your thoughts?

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20 Responses

truddickJuly 22, 2009 / 7:31 am

“…Sure, health care costs are a major contributor- but when people can’t eat- they sure can’t afford health care….”

But in most cases, it’s the employer who affords health care. Nations with a government-run health care system have an advantage over the USA because their systems cost far less while delivering equivalent service.

(and for those who are going to parrot the insurance-execs’ line about how the French/British/Canadian systems restrict your choice of provider, limit care options, and delay necessary services–wake up, my insurance company already does all those things.)

So health care isn’t an isolated perk that has no effect on the economy in general or employment rates in particular.

Going beyond the direct financial impact on employers, it’s also true that having a large segment of uninsured people costs the rest of us (by forcing us to pay higher medical bills to cover what hospital emergency rooms lose on uninsured patients).

Further, the uninsured don’t seek medical care as soon as they should–which creates health problems for the general population, since this population becomes a breeding ground for infectious diseases and a ripe environment for the evolution of things like antibiotic-resistant tuberculosis, staph, and other diseases.

So don’t think health care is irrelevant, OK?

Overall, there’s some parts of this essay that seem draconian. Require businesses to retain all employees? Force corporations to hire? I’m getting a mental image of manufacturing plants with workers sitting half-asleep on folding chairs three days weekly, of construction firms with workers at the central office playing euchre four hours a day.

Would there be an exemption for small business owners who might go broke if forced to retain workers?

If you want government to create jobs, then do it like FDR did–get work projects and let the government do the hiring itself.

Now, on the point regarding limiting executive salaries and compensation packages–yes, long overdue. No chief executive should receive a salary more than 100 times that of the corporation’s lowest-paid employee. That’s the model in other nations, BTW–it fits well with a single-payer government insurance system.

@TRuddick- I didn’t suggest businesses have to retain employees- I just said, you can’t pay big bucks if you are laying them off. Ratios need to be in place.
I didn’t say anything about small business either- just publicly traded stock companies.
Please don’t put words into my blog/mouth that I didn’t say.

Tim BaileyJuly 22, 2009 / 9:50 am

Truly scary, David.

I have looked at the Constitution of the United States a couple of time in my life and I could not find the part about using “FORCE” to make companies hire nor the part about limiting pay or even withholding it if they must fire/lay off employees.

Those ideas must be hiding in the same Article that holds the part about Health Care being a right and using tax dollars so someone on food stamps can spend my tax money to buy hot dogs to use as fishing bait (true story). In fact it is probably hiding right past the part about owning a majority of an automobile manufacturer.

We are living in very hard times. Yes, there is a class war going on; but I call it jealousy. It is jealousy on the part of people who only see the nice home, nice car, etc. But they do not see the 85-130 hour work week, the sacrifices of missing some special events, the stress of keeping thousands of people employed, etc. Life is not a free ride.

If we, as a country, want to make all of the rules that govern business, to make all of the rules that govern the private lives of citizens (like forcing my daughter to ride in a car seat until she is 12 years old), and punish those who work hard to earn those ‘six figure’ incomes by passing taxes that steal a huge chunk of one’s income – then let’s not kid ourselves; we need to repeal the Constitution of the United States and operate under a document that better defines what it is we are trying to do… make everything ‘fair’ and ‘equal’.

David EsratiJuly 22, 2009 / 10:00 am

@Tim
Welcome to the site-
and, as to pulling out the Constitution, I don’t see where it says the tax payers should bail out billionaires when their house of cards collapses.
The process of incorporating, and the rights and privileges of issuing stock are highly regulated- yet, the compensation structure once completed- aren’t. This is a MASSIVE fail- when our whole economic system is at risk because of the criminal behavior of these ego driven sociopaths.
Don’t pull the constitution out in the same breath as protecting the rights of these barons of business who just stole the retirements of millions of people.
And- I’m working 13 and 14 hour days- and paying people- and not stealing from the tax payers- while the CEO of UHC pays himself $144 Million in a YEAR- while I’ve had to cut our health plan as their rates skyrocket EVERY SINGLE YEAR.
Nope- the Constitution hasn’t protected the common man very well lately- but, we have no problem making sure some bond trader still makes his millions- backed off taxes paid by you and me.

Funny, I thought one of the fundamental principles upon which the United States was founded was that human beings have certain unalienable rights, rights which we deserve whether or not they are specifically enumerated.

The Declaration of Independence uses the phrase “among these,” not “limited to the following list.”

The Preamble to our Constitution talks about how our Constitution was established, in part, to “promote the general Welfare.”

If healthcare isn’t a part of the well-being of our people and of our society, I don’t know what is.

How bad will it have to get before the voices of the unemployed get heard? 13.7% is pretty close.
No its not close. The peak US rate during the Depression, in 1932-1933, was around 24%. More around 30% if you only count private sector unemployment. That’s what it took to elect Roosevelt and a Congress that would vote in his New Deal programs.

If you count the people employed by New Deal workfare programs unemployment dipped to the 10%-15% range, peaked again in the 20% range in mid 1930s and then dropped again to 15% before the military spending kicked in starting in 1939, leading to single digit unemployment during the war.

So the current 13% high is lower than the New Deal-era unemployemnt lows.

David EsratiJuly 22, 2009 / 4:25 pm

But Jeff- back in the depression they didn’t have the ability to do their own journalism, communicate, organize like they do today.
I think 15% is the tipping point now… we will see.

I’d point out that the 1930s was a heyday of grass-roots organizing…in the labor movement. This is when the CIO was able to organize the unskilled labor in mass production industry. Which was quite a feat when you consider this was an era of high unemployment.

I’m thinking people weren’t so ideologically brainwashed back then, and the magnitude of the crisis made the need to “do something” more clear.

Also, to clarify my point, I totally agree with your addendum. Congress and the President, both parties for the past many years, have made a travesty of what the framers of the Constitution intended in the formation of a representative republic.

The bailouts, in any shape or form, are complete nonsense and are a massive abuse of our permission to be taxed. The federal, and state, and in many cases some local governments have failed by going beyond their enumerated purposes and created legislation that makes one scratch his head. The Judicial branch is supposed to take situations like these and nullify these laws if they are unconstitutional – using that document alone as the litmus test. That is the fail.

I am not defending people who stole money and are crooks. They should get every ounce of punishment they deserve, but am simply pointing out the problem of the supposition that somehow once someone makes a ceretain amount of money they should give it up (or a huge portion of it) because Congress thinks it is ‘fair’ that they pay for this program or that initiative. (Like picking people who choose to use tobacco being picked to pay for childrens health care.) It is just wrong.

And… Drexel Dave. Thank you for your comment. I would like to clarify that I am not really confused at all about corporatism and capitalism. I was simply trying to illustrate a point that when the government gets involved in private sector businesses (bailouts, firing CEO’s, taking a majority share in corporations) it is no longer our constitution that they are operating under. It is, depending on a semantics argument, either socialism or a move in that direction.

And to David Lauri. I appreciate the debate. This had been something I have tried to figure out for a long time. I have some ideas and have formulated my opinions; but it is always nice to have them bounce back to be reexamined. Yes, the Declaration of Independence lays out some founding principles, as do the Federalist Papers and other documents as well – the fundamental rights you are speaking of are life, liberty, property, pursuit of happiness – correct? I don’t see healthcare or bailouts or ‘too big to fail’, but we will move on.

The Preamble says – well we all know what it says. And it does mention promoting the “general welfare”. However, that part of the document does not really ‘do’ anything; really it is a Mission Statement, but I’ll go with it… now we could go around and around with syntax arguments and semantics, but promoting and providing are two different things. We promote the general welfare (which who knows what was meant by welfare) and provide for the common defense (I am guessing military spending). See the difference? Then the rest of the document goes on to outline exactly how they are accomplishing what was stated in the preamble – and those are the parts that count.

Yes, it would be nice if health care were given to everybody, but it is not a perfect world. Is the system broken, yes and a big YES. But, it is not the job of Washington to do it.

David EsratiJuly 24, 2009 / 9:18 am

Briefly @Tim
“it is not the job of Washington to do it”
But, since I can’t buy health care at the same rates as the extortionist capitalists- I’d rather buy it from the government.
I don’t have a problem paying for health care- I do have a problem paying for “health insurance” which is nothing different than the mob running a protection racket- buy your health insurance from us- or PAY, PAY, PAY- at much higher rates
As to compensation- if a small business doesn’t make money- the CEO doesn’t get paid millions.
I just want equal opportunity. Rewards must come from taking risks- not from no risk CEO jobs.
Our markets have been manipulated from financial instruments into a casino by lobbyists- it’s time for Congress to put some sanity back into it.

GeneJuly 24, 2009 / 11:46 am

Anyone can buy health insurance, and it is affordable. But people don’t make it a priority, and I am not talking about the poor. A lot of young people who make decent money choose not to spend money on such things. That is a fact.

We, as a society, are too GD busy buying crap IKEA furniture, Bud Light, Salem smokes, Subway and the such and wonder why we don’t have cash for insurance. Too many of us spend too much money on a brand new car and a pad to live in – and we give little if any thought to important shit in our lives.

Health Insurance is a scam, but it is available. And work can be had if you suck up you pride and work for a little less in a different industry. But too often we have too many people who are too good for certain types of jobs. We all know it is true.

We did this to ourselves. You can blame the rich, but the fact of the matter is that people buy too much crap and give little thought to what is important in one’s life. Change your life first before trying to change the world.

I will be glad to set a budget and priorities for anyone – but they want to go to movies and eat out all of the time, so there is little helping these people.

GeneJuly 24, 2009 / 12:00 pm

Some interesting facts regarding poor people. Maybe a little cutting back and they could get some health insurance. BTW, no telling the cash the spend on cigarettes, beer, booze, porn, fast food, illegal drugs, NEW HDTV’s, cell phones, Ipods, Blackberry, Dingleberries, PC’s, Laptops, overpriced shoe and clothes, etc.
(I know most liberals think these are necessities, kind of like AC)

Forty-six percent of all poor households actually own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.

Seventy-six percent of poor households have air conditioning. By contrast, 30 years ago, only 36 percent of the entire U.S. population enjoyed air conditioning.Only 6 percent of poor households are overcrowded. More than two-thirds have more than two rooms per person.The average poor American has more living space than the average individual living in Paris, London, Vienna, Athens, and other cities throughout Europe. (These comparisons are to the average citizens in foreign countries, not to those classified as poor.)Nearly three-quarters of poor households own a car; 30 percent own two or more cars.Ninety-seven percent of poor households have a color television; over half own two or more color televisions.Seventy-eight percent have a VCR or DVD player; 62 percent have cable or satellite TV reception.Seventy-three percent own microwave ovens, more than half have a stereo, and a third have an automatic dishwasher.

Gene, have you heard of pre-existing conditions? Google it and you’ll find examples of people who can’t afford to buy insurance because of their pre-existing conditions. Insurance isn’t worth much if one has to forgo food and shelter in order to pay for it.

GeneJuly 24, 2009 / 5:33 pm

Yes, I know that, I just did not complete my thought…..

You are right. My point is that a lot of people (healthy) can afford health care insurance but choose not to buy it. We rather buy crap than health insurance.

BTW, I support some sort of National Health Care. Not what they are trying to do, but in some form.

Insurance is sort of a middle man. If we could change government to be more efficient and business like (that will never happen, but if it could happen…..) then we could 86 insurance companies and EVERYONE would pay a tax for NHC. As I see it, doctors, nurses, other employees, investors, insurance companies, insurance sales people, etc…… are all making money.

Eliminate insurance, pay (what would have been for insurance) taxes to a well run government and they pay out the HC industry. “A well run government” will never happen though, so what we have is here to stay.

David EsratiJuly 25, 2009 / 11:00 pm

A reader, ShortWestRick- sent me a link to testimony before the House, just last week.
It’s a 12 page document- that should be a must read.http://www.house.gov/apps/list/hearing/financialsvcs_dem/simon_johnson.pdf
Testimony submitted to the House Committee on Financial Services, Hearing on “Systemic
Risk: Are Some Institutions Too Big To Fail And If So, What Should We Do About It?”
Tuesday, July 21, 2009, 2pm.
Submitted by Simon Johnson, Ronald Kurtz Professor of Entrepreneurship, MIT Sloan School of
Management; Senior Fellow, Peterson Institute for International Economics; and co-founder ofhttp://BaselineScenario.com